Why Gold Can't Replace The Dollar | The Man Who Wrote The Book

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Barry Eichengreen argues the dollar’s reserve share is still eroding, but the losses are not flowing to gold as a true replacement currency; instead, the main shift is away from dollar usage and toward a more fragmented reserve system. He says the dollar had been declining slowly by about 0.5 percentage point of global reserve share per year, but the pace and character of the move have changed, with the dollar becoming less usable than the market assumes in some geopolitical situations. On gold, Eichengreen frames central bank buying as structural catch-up rather than a wholesale anti-dollar bet. He says China’s renminbi push has stalled, the euro has gained essentially none of the dollar share lost this century, and central banks are accumulating gold in record quantities for reserve diversification. He also points to gold repatriation and episodes such as Europe’s shift after the Marine Le Pen episode as signs that reserve managers want assets they can control directly. For metals, the takeaway is supportive for bullion demand on the margin: official-sector buying remains a sticky source of demand, even if gold is not replacing the dollar as the dominant reserve asset. Near-term price impact is more indirect than tactical, but the interview reinforces the strategic case for gold in reserve portfolios, especially if geopolitical fragmentation and concerns over reserve usability persist.